Investor Alerts and Bulletins

Investor Alert: Pre-IPO Investment Scams (Updated)

The SEC’s Office of Investor Education and Advocacy is issuing this updated Investor
Alert to warn investors about investment scams that purport to offer investors
the opportunity to buy pre-IPO shares of companies, including social media and
technology companies such as Facebook and Twitter. SEC staff is
aware of a number of complaints and inquiries about these types of frauds,
which may be promoted on social media and internet sites, by telephone, email, in
person, or by other means.

The Commission’s Division of Enforcement continues to take action in this area. On
April 4, 2012, the U.S. District Court for the Southern District of Florida in
Miami issued an Order to Show Cause and Other Emergency Relief to halt a
defendant’s fraudulent sale of securities of an investment vehicle that he falsely
represented owned pre-IPO shares of Facebook, Inc. In that matter, the
Commission’s motion for an order to show cause alleges that Allen Weintraub,
using entities with names such as “Private Stock Transfer, Inc.”, “PST
Investments III, Inc.”, and “World Financial Solutions” falsely represented
that he would sell the investors pre-IPO shares of Facebook, Inc., and that PST
Investments had an ownership interest in Facebook stock. The Commission’s
motion also alleges that Weintraub utilized the website privatestocktransfer.com
to perpetrate his scheme. The Division of Enforcement urges anyone who
believes that Allen Weintraub may have recently defrauded them to contact John
Rossetti, Senior Counsel, at 202-551-4819.

In another matter in September 2010, a judgment order was entered in favor of the SEC
based on allegations that a scam artist had misappropriated more than $3.7
million from 45 investors in four states by offering fake pre-IPO shares of
companies, including AOL/Time Warner, Inc., Google, Inc.,
and Rosetta Stone, Inc. before the companies went public.

While legitimate offerings of pre-IPO shares in a company are not uncommon, unregistered
offerings may violate federal securities laws unless they meet a registration
exemption, such as restricting the private offering to “accredited investors” --
investors who meet certain income or net worth requirements. Investors should be mindful of the risks
involved with an offer to purchase pre-IPO shares in a company. As with
any investment, we encourage investors to research thoroughly both the
investment product and the professional offering the product before making any
investment decision.

For additional information, please
visit the following web pages on the SEC’s website and Investor.gov: